It has been a busy time in the wholesale sector in the past year or so, with some major deals cementing the hold of the big two players in the market, one that also boasts a thriving number of independent brands and recent entrants.
Two giants, Palma-based Hotelbeds and Australia’s Webjet, head this sector. Below them are a host of other major players in a league ripe for consolidation – one that is attracting interest from outside investors as well as within.
Proof of this came in 2016, when market leader Hotelbeds was acquired from Tui Group for €1.2 billion by private equity firm Cinven and the Canada Pension Plan Investment Board. The deal provided funds for acquisitions, with Tourico Holidays bought in June 2017 and GTA, its accommodation, transfers, tours and activities arm, in October last year. Hotelbeds now boasts annual sales of 47 million room nights, claiming to be the global leading bedbank and number one cruise handler worldwide.
Hotelbeds is “more than five times our size”, according to Nigel Horne, chief executive, Europe, of Webjet’s B2B brand WebBeds. This admission comes despite Webjet’s £200 million purchase of JacTravel in September 2017, which added an aggregated 170,000 hotels plus another 17,000 directly contracted. The pivotal deal cemented WebBeds into the second place B2B slot globally, but there is still clear water between the two giants.
“Unless there is some major acquisition, we don’t see us getting close any time soon, but equally there is a gap between us and number three. We intend to make that gap bigger,” says Horne.
It is unclear which company can lay claim to the third-place spot as many are private companies that do not publish figures, but meanwhile, Webjet is keen to grow its B2B business in an expanding market: “The wholesale sector I think will grow because specialism is increasing in the industry,” he says. He cites WebBeds’ deal with Thomas Cook, which will see it contract all non-branded Cook properties in 2019. “A few years ago, no one would have said a vertically integrated tour operator would have done that. There are other examples – we have smaller-scale deals with Eurostar and Trailfinders. We will see people focus on distribution and come to us for procurement.”
Others are in agreement that the sector is growing and a target for consolidation.
Travco UK remains family-owned despite a £200 million turnover and sales of more than two million room nights in 2016. Samuel Remy, global sales manager, says the market is not without difficulties despite this success: “We have two big conglomerates in the game – we are fighting against monsters.”
He predicts “some minor mergers in the next few years’, but adds: “Travco won’t be part of it. We are pretty much the last independent family-owned company.”
He is confident about Travco’s future, as he is about the sector: “Ten years ago, people were saying that wholesalers would be gone in 10 years, but we are expanding – the B2B market is still very much in control of the outbound market in many areas of the world and many countries have not yet embraced online distribution. There are a lot of territories that we are going after.”
Remy said Travco now had connections to more than £10 billion of hotel stock. Its inventory has in excess of 100 countries with more than 12,000 hotel partners. “We are contracting 50 new hotels every week. We will have 15,000 by 2020 and 20,000 by 2025. The company has been running for 30 years. For the first 20-25 years we were regarded as a European specialist, but then we started global expansion with a strong focus on the Middle East, North America and Asia. We need to expand in these areas, so by the end of the year we will have an office in Vancouver to handle North America.”
From strength to strength
More proof of how dynamic this sector is comes from another UK brand, Travellanda. It will use WTM to showcase its new range of 18,000 activities, added this summer to its portfolio of more than 300,000 hotels. Ahmad Alkatib and two other ex-JacTravel employees formed Travellanda only eight years ago. “It has been a very fast train ride from there,” he says. “We are mainly a hotel wholesaler, but clients were saying they needed to book transfers, so we added them. This year, there were a lot of requests to add activities, so we try to feature them with most of our hotels.”
The brand remains B2B-only and has offices in London, Istanbul and Bangkok. “In the next two to three years we want to focus a lot more on the Middle East and South America, possibly opening offices there.”
Alkatib describes the UK as “probably the most saturated market” for companies like his, but adds: “I always say there is room for more, because no matter how many times we see a new entry, they manage to succeed. We made sure we focused not just on the UK business. We had to get to other areas where wholesalers do not go and find different types of clients.”
He predicts a wave of consolidation in the sector following the Hotelbeds’ acquisition spree. “I really think this is just the beginning. It will get to the point where one large wholesaler dominates the market.”
Wholesalers will find plenty of buyers to deal with at WTM. The sector is positioned within the International Hub stands and among those will be that of the European Tourism Association (Etoa). Etoa will be hosting more than 250 tour operators and intermediaries, including 130 Chinese buyers.
To underline the importance of this market, Etoa will have a stand in International Hub on behalf of the EU promoting European tourism to the Chinese trade. Etoa chief executive Tom Jenkins says: “WTM provides exhibitors with an amazing opportunity to find business they don’t necessarily know exists.”
With WebBeds only having set up in 2013 and Travellanda in 2010, there might be quite a few companies doing business that are unfamiliar to visitors – but with the wholesale sector’s booming growth rate and increasingly diverse interests, that may not be the case for long.